Crude Oil: FG projects $289bn Local Refining in Five Years

The Federal Government has revealed that it is targeting local refining of over 2.555 billion barrels of crude oil worth over N120trn in the next five years.

According to a report by Punch, the Executive Secretary of the Nigerian Content Development Monitoring Board, Simbi Wabote, spoke on the sidelines of the ongoing Nigerian Content Midstream-Downstream Oil and Gas Summit 2022, organised by the board in Lagos.

According to him, a combined refining capacity of more than 1.4million barrels per day is expected from the rehabilitation of the existing four national refineries, co-location of new refineries, construction of greenfield refineries, and construction of modular refineries as part the Ministry of Petroleum Resources’refining roadmap in the next five years.

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The refining of 1.4million barrels per day is approximately 2.555billion barrels in five years.

The Brent at 5:19pm Nigerian time on Monday was sold at $113.11 on the international market.

If exported, the 2.555billion barrels of crude oil could fetch the country about $289bn or N120trn in five years.

“The Ministry of Petroleum Resources under the leadership of President Muhammadu Buhari has rolled out the Refining Roadmap with emphasis on rehabilitation of the existing four national refineries, co-location of new refineries, construction of greenfield refineries and construction of modular refineries. From all of these, the government expects more than 1.4million barrels per day within the next five years,” he said.

According to Wabote, about 400,000bpd is expected from the rehabilitation of the NNPC refineries in Port Harcourt, Warri, and Kaduna, using a target performance of not less than 90 per cent of nameplate capacity.

The greenfield element of the roadmap covers the mechanically complete 650,000bpd Dangote Refinery in Lagos, and the 200,000bpd BUA Refinery in Akwa Ibom State.

In the aspect of modular refineries, he said the NCDMB is serving as a catalyst to enhance the realisation of the refining roadmap.

“Our partnership with Waltersmith resulted in the delivery of the 5,000barrels per day modular refinery in Imo State currently in operations”, he said.

Next in view, he said, is the 2,500 barrels per day Duport Modular Refinery located in Edo State due for inauguration this year.

Others under construction are the 2,000 barrels per day Atlantic Refinery and the 12,000 barrels/day Azikel Hydro-skimming Refinery both in Bayelsa State.

The NCDMB boss said the board, in partnership with the NNPC, is set to construct a 50,000 liters petroleum products terminal in Brass Island to support the storage and distribution of white products in the coastal states of the country.

Apart from the modular refineries, he said the board was also in partnership with Bunorr Integrated Energy Limited for the establishment of 48,000 litres/day Base Oil Production Facility (via recycling of used engine oil) in Port Harcourt, Rivers State, adding that clean diesel was also one of the by-products of the processing plant which due for inauguration before year-end.

He said construction activities were ongoing at the Eraskon Lube Oil factory in Gbarain, Bayelsa State sequel to the board’s partnership for the establishment of a 64,000liters/day lubricating oils blending plant.

“Factory acceptance test is ongoing for the major equipment prior to site installation. The Eraskon brand of engine oil, gear oil, hydraulic fluids, and other grades of lubricants is set to address the lubricants needs in the catchment states of Bayelsa, Rivers, Imo, Delta, and beyond ‘’, he said.

However, a communication consultant in The Adjunct Faculty of the School of Media and Communications, Pan Atlantic University, Lagos, Chido Nwakama, faulted the feasibility of the target.

According to him, the Federal Government should not include the moribund four refineries in the target.

“The target does not make sense at all. Those refineries do not work and produce anything; rather, we are supposedly spending billions to keep them open. So they are playing on our intelligence whenever they throw out these figures, and I wonder where they get the guts to lie to us so openly. They insult our intelligence by telling us that refineries that are not working have possible production capacity”.

According to him, the four refineries have no capacity of any kind, and Nigeria should rather build new ones.

“They should shut them down so that we know they do not exist, and then use the money they are supposedly budgeting for their maintenance to build new ones. It takes just two years to build one refinery- that is what other countries use to build new ones.

“It is annoying and not realistic because it doesn’t even exist. We have done about 15 years of reeling out figures out of nothing. Those figures have no bearing on the facts on ground. The fact on the ground is that those refineries are not working or producing products. Even Dangote refinery was supposed to have started in 2016.

“We are now in 2022, and they are saying 2023, or 2024. So whenever you hear those figures, you should know that they don’t make sense at all”, he said.

On his part, a petroleum engineer and Technical Director-Drill Bits, Bala Zaka, also says such projections could only be possible if the government had both economic and political will to implement the plan.

He said, “I don’t think such projection is possible because even the Port Harcourt refinery the government is currently planning to fix will produce about 60 000 barrels per day. The capacity of the four refineries is 450, 000 barrels per day. It is not possible unless there is a strong economic and political will, and I’m saying this because we can practically analyse the current detail and project it into the next five years to see whether there is going to be any feasibility at all.

“We can start by practically looking at things like this- the capacity of the four moribund refineries if operating at 100 capacities will be a total of 450, 000 barrels. Is it possible for those refineries to become active and refine 450, 000 barrels of crude oil per day in the next five years? The answer is no. Yes, Dangote refinery is supposed to be about 600, 000 barrels. Added to the 450, 000 barrels from the four refineries makes it 1.05mn barrels.

“For Dangote refinery, I can say yes it is possible because it’s a new refinery. But I don’t see the four refineries bouncing back and working at 100 per cent capacity in the next five years considering the level of decay. Then the differential figures of 350, 000 barrels on other modular refineries could be possible if we know how many modular refineries are active today, and what are their refining capacities?

He added, “As of today, there is no modular refinery refining up to 50, 000 barrels. But even if you have modular refineries refining 50, 000 barrels, that means if we refine 350, 000 barrels, you would need about seven of those refineries. By my analyses, you may never get such a number of refineries in the next five years”.

Zaka also cited hostility in the Niger Delta and the coming 2023 elections as key reasons such projections may not be impossible.

He added that “Another key thing that will play a role is the outcome of the political activities going on. Next year, Nigeria will have a new set of leaders. What will be the focus of those leaders on the internal domestication of our raw materials? What will be their opinion about the current PIA that we say have some poisonous clauses, especially the area that predicated our deregulation on imports? If you remove that poisonous clause and base our deregulation on internal refining, then, there’s a likelihood of harnessing stakeholders to make sure that we refine locally”.